Arizona taxpayers' cost for school vouchers leaps to $900M a year

PHOENIX — The system of universal vouchers enacted by Republican lawmakers will cost Arizona taxpayers $900 million next school year, 63% more than budgeted just a month ago.

By the end of the next school year there will be about 100,000 students getting state funds to attend private and parochial schools, the director of the system, the Empowerment Scholarship Account, Christine Accurso, said in a new memo to legislative budget staff.

That compares with about 58,000 who are now in the program and another 3,000 who have submitted applications.

The about $900 million Accurso said the state must come up with to pay for the vouchers is about one dollar out of every eight now earmarked for public education.

It’s up from the $552 million estimate prepared just months ago by the Joint Legislative Budget Committee.

Cost shifts from parents to taxpayers

Despite that, state schools chief Tom Horne argued Wednesday there really is no additional cost to the state.

“The 39,000 additional students that are being projected for the next year are going to be educated someplace. They’re either going to be educated in the public schools or they’re going to be educated in ESAs,” said Horne, a Republican elected in November.

The $900 million estimate, he said, includes money following those students from traditional schools to private schools.

That is not accurate, however.

Horne’s own staffers acknowledged that three out of every four of the students who have applied for the new universal vouchers to date already were going to private schools — and on their parents’ dime. Now their tuition will be borne by taxpayers.

Even assuming Horne’s projections that just half of the additional 39,000 students expected to sign up before the end of the next school year already are in private schools, with the median voucher running $10,000, that alone adds up to an additional $200 million.

Hobbs left vouchers in budget

The fact that there’s been a burst of parents seeking to shift the costs of their children’s private school tuition to the state should come as no surprise to lawmakers. They were warned earlier this year by their own budget staffers, before Arizona’s new spending plan was adopted, that would happen.

“We expect that most of the growth in universal ESA participation will likely occur among private school and home school students,’’ said the report by the Joint Legislative Budget Committee. “They have already decided to opt out of the public school system and would be likely to receive a financial gain from ESA program participation.’’

It was that logic that caused Democratic Gov. Katie Hobbs, in her first budget request in January, to call on lawmakers to repeal universal vouchers approved last year.

Prior to that, vouchers were designed specifically to help students who fit certain categories who may need help beyond what they could get in public schools. These included students with special needs, foster children, children living on reservations, and those attending schools the state rates as “D” or “F.”

The Republican-controlled Legislature, at the behest of then-Gov. Doug Ducey, voted in 2022 to lift all restrictions, making state funds available to all who want.

Hobbs proposed to return to the way the situation was before. She sought to redistribute the cost of the expanded program — at that time pegged at about $144 million — for other education priorities.

But closed-door negotiations between Hobbs and legislative leaders failed to rescind the expansion. Republicans also refused to put a cap on the number of new students who could enroll, to help control costs.

In the end, Hobbs signed the state government’s $17.8 billion spending plan for the coming year, saying she got other key victories, including $300 million in one-time funding for K-12 education.

On Wednesday, informed of the new estimate, Hobbs went back to her January talking points.

“The school voucher program in its current form is not sustainable,’’ she said in a prepared statement. “Legislative Republicans need to explain why they are forcing this runaway spending on Arizona taxpayers and making working families foot the bill for private school tuitions. We need to bring an end to the wasteful school voucher spending that threatens to decimate our state’s finances.’’

What’s next?

Lawmakers will be back at the Capitol on June 12. But whether Hobbs will try to renegotiate the deal she agreed to just a month ago — one heavily criticized by many members of her own party — is less than clear.

“We are evaluating our options,’’ said the governor’s press aide, Christian Slater.

House Speaker Ben Toma, R-Peoria, questioned the 100,000 students figure prepared by Horne’s staff, saying his numbers are closer to 68,000.

“ADE’s new round-number estimate provokes natural skepticism,’’ Toma said. He said he wants legislative staffers to review the data and methodology “before we can comment on it further.’’

There was no immediate response from Senate President Warren Petersen, R-Gilbert.

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More money per student for some schools

The report from Horne’s department also contends that students switching from public schools to private ones save money for the state. That is based on a law that the base voucher — the amount that is available for a student with no additional needs like special education — is supposed to be set at 90% of what the state pays on a per-student basis if that same student were attending public schools.

But that is misleading.

The 90% figure is based on aid to charter schools, or private, for-profit schools that qualify as public schools that cannot charge tuition. The state gives them an additional $1,986 for each K-8 student and $2,314 for high schoolers above what they give to traditional public schools, which changes the calculus.

Figures provided by the Arizona Association of School Business Officials show that puts the basic voucher for this year at $6,764 for elementary and middle school students, or $424 more per student than state aid to district schools.

Vouchers for high schoolers are worth $7,532, about $540 more than the state provides to public schools.

Partisan legislative reaction

Several Republicans who support vouchers said they were not concerned about the price tag.

In fact, Rep. Jacqueline Parker of Mesa said in a Twitter post that $900 million is “not enough yet,’’ calling it “a drop in the bucket to the other $7+ billion spent on the useless indoctrination camps that are ‘government schools.’”

Rep. Cory McGarr of Marana said “this is an admission if given the choice parents will choose ESAs.’’

But the memo may have energized Democrats, who were unhappy about Hobbs giving in on the issue of universal vouchers during the budget talks.

“I say let’s not forget our original fight and not give in this time, me included,’’ said Sen. Catherine Miranda of Phoenix in a Twitter post. She wants to raise the issue again when the Legislature reconvenes on June 12.

Competition issues

John Ward, an internal auditor for the Arizona Department of Education, said his agency was not hiding the true cost of the expanded voucher program when lawmakers adopted the budget a month ago with its $552 million cost estimate. He said state law requires only that a report be prepared every year by May 30 of anticipated voucher enrollment and the cost for the coming school year.

“We just completed that analysis a few days ago,’’ Ward said. “It was at that point that we had our estimate of 100,000 students by the end of next fiscal year — June 30, 2024 — at a cost of $900 million.’’

Horne sidestepped the question of whether there is enough money in the $17.8 billion state budget to support the increase in the number of private school students now expected to rely on state funds for their education.

“Right now, we’re relying on basic state aid,’’ he said, based on the premise that these students were going to public schools until now. “If we conclude that more is needed, we will have to deal with that at the time.’’

At least part of the reason there has been a big influx of applications for vouchers is due to Horne himself.

State lawmakers agreed to set aside $10 million to administer the voucher program. But Horne acknowledged he has been using some of that for advertising the universal vouchers.

Asked how much, he responded, “I’m not prepared to say.”

Horne, who at one time was a member of the Paradise Valley Unified School District governing board, has become a major champion of vouchers.

“Competition is good for everyone,’’ he said. Horne said it helps keep public schools to do better.

That presumes, however, there is true competition. Traditional public schools must accept anyone living in their district. Even charter schools — privately run for-profit schools — also generally cannot discriminate against applicants.

Private and parochial schools, however, are free to accept — or reject — any student for any reason, including those who may be the hardest to teach because of learning disabilities or language skills.

Horne brushed aside the question of whether the comparisons are fair.

“If a public school is worried about losing students to ESAs or to charter schools, it’s motivated to improve its academic performance so it won’t lose those students,’’ he said.

Horne contended that in public schools, “The test scores have not been good right now because the focus has been too much on things other than academics. I can name them: critical race theory, social-emotional learning, inappropriate sexual lessons, all kinds of things that detract from academics.’’